Introduction
Insider trading is a sort of securities fraud that occurs when an individual uses substantial, nonpublic knowledge about a company to make profitable trades in the company’s stock or other securities. The United States is among the several countries that have outlawed this form of business dealing, and offenders face heavy penalties. The investigation, prosecution, and sentence of persons suspected of insider trading constitute insider trading cases. You will gain an understanding of what insider trading is, see a sampling of recent high-profile insider trading cases, and learn how these instances have impacted the ethics and regulation of the financial sector.
Overview of Famous and Recent Insider Trading Cases
There have been allegations leveled against a number of the most well-known people and companies in the world that they participated in unlawful insider trading. The cases involving ImClone Systems, Martha Stewart, and Raj Rajaratnam are among the most well-known examples of unlawful insider trading. Raj Rajaratnam and Martha Stewart are also well-known.
In each of these instances, it was discovered that some individuals had made trades in the company’s stock or other securities using insider knowledge that they had obtained. In addition to these well-known cases, there have been several cases in recent years involving insider trading. Some examples of these cases include the ones brought against William Walters, Mathew Martoma, and David Nosal.
List of Insider Trading Cases
The List of Insider Trading Cases is a comprehensive compilation of the most famous and recent cases of insider trading activity. It offers a comprehensive summary of the people and companies who have been accused of insider trading as well as the sanctions that have been levied against them. For those following insider trading cases closely, the list can also serve as a useful tracking tool. They track insider trading activity to provide important details on the nature of the offense, the parties involved, and the penalties imposed. This is a great resource for people who want to know more about insider trading and its legal and financial ramifications of it. Here is some of the list of insider trading cases below:
1. Martha Stewart
2. Raj Rajaratnam
3. Rajat Gupta
4. Dennis Levine
5. Ivan Boesky
6. Galleon Group
7. Rajiv Goel
8. Mark Cuban
9. Anthony Chi. Pajcin (Vitesse Semiconductor Corp.)
10. David W. Robbins and Andrew W.W. Caspersen (Bridgewater Associates LP)
Famous Insider Trading Cases
ImClone Systems
One of the most high-profile insider trading accusations in recent years is ImClone Systems. CEO Samuel Waksal was found guilty of illegally disclosing firm information to his daughter and friends in 2001. Among those pals was Martha Stewart. Once Stewart sold her ImClone stock based on confidential knowledge, she faced charges of insider dealing. Further charges of insider trading, securities fraud, and obstruction of justice were upheld against Waksal. He received a prison term of seven years and a fine of over $4 million.
Martha Stewart
In the ImClone case, Martha Stewart was accused of engaging in illegal insider trading after she sold her stock in the company based on the knowledge that was not available to the general public. It was determined that Stewart was responsible for four counts of obstructing the administration of justice, two counts of making false statements, and one act of securities fraud. She was given a prison term of five months and a fine of more than $30,000 for her crime.
Raj Rajaratnam
Galleon Group, a hedge fund, was suspected of engaging in illegal insider trading in the year 2009, and Raj Rajaratnam was the fund’s founder. According to allegations made by the SEC, Rajaratnam and other employees of the company made more than $60,000,000,000 in illegal profits by using confidential information. Rajaratnam was found guilty of 14 charges of securities fraud and conspiracy and was given an 11-year prison sentence as a result of the verdict. In addition, he was given a fine that was greater than $92 million.
Ivan Boesky
In 1986, Wall Street trader Ivan Boesky was found guilty of insider trading and was sentenced to three years in prison. He had made over $50 million in profits from trading on non-public information.
Dennis Levine
In 1986, investment banker Dennis Levine was found guilty of insider trading and sentenced to two years in prison. He had earned over $12 million in illegal profits by trading on insider information.
Mark Cuban
In 2008, businessman Mark Cuban was accused of insider trading after he sold shares of a Canadian internet company, Mamma.com, in 2004. While the case was eventually dismissed, it still serves as a reminder of the dangers of insider trading.
Recent Insider Trading Cases
William Walters
The professional gambler William Walters was found guilty of insider trading in the year 2017. He was accused of making more than $40 million in profits by exploiting information that was not publicly available about the stock of Dean Foods Co. He was given a sentence of five years in prison and had to pay a fine of more than $10 million after being found guilty of nine counts of securities fraud.
Mr. Mathew Martoma
SAC Capital Advisors portfolio manager Mathew Martoma was convicted of insider trading in 2014. He was accused of trading Elan Company and Wyeth stocks while in possession of material nonpublic information. On his two counts of securities fraud, a jury imposed a nine-year prison term and a fine of more than $10 million.
Author: David Nosal
Former Korn Ferry International executive David Nosal was convicted of insider trading in 2016. To the tune of over $600,000, he allegedly profited from the stock of a software business by utilizing insider information. He received a one-year prison term and a fine of more than $60,000 after being found guilty of four counts of conspiracy.
Wells Fargo Executives
Two former Wells Fargo executives were charged with misleading investors about the company’s community banking operations by the USA’s Securities and Exchange Commission, known as the SEC, in July 2020. The SEC alleged that former Wells Fargo CEO John Stumpf and former CFO Timothy Sloan made false and misleading statements about the company’s retail banking business during a conference call in October 2014. The SEC also charged former Wells Fargo board member Enrique Hernandez Jr. with insider trading.
Goldman Sachs
In July 2020, the U.S. Securities and Exchange Commission (SEC) charged former Goldman Sachs banker Matthew Korenberg with insider trading. The SEC alleged that Korenberg used confidential information to trade in the stocks of three companies before the announcement of their merger and acquisition transactions.
SEC Charges Former Oracle Employees with Insider Trading
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former Oracle employee with insider trading. The SEC alleged that the former employee, Joseph Chen, traded in Oracle stock before the announcement of Oracle’s $10.3 billion acquisition of NetSuite, a cloud-based software company.
JPMorgan Chase Employee
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former JPMorgan Chase employee with insider trading. The SEC alleged that the former employee, John Barry, used confidential information to trade in the stocks of two companies before their merger and acquisition transactions.
David Liew
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former Microsoft employee with insider trading. The SEC alleged that the former employee, David Liew, used confidential information to trade in the stocks of three companies before their merger and acquisition transactions.
Qualcomm Employee Stephen Richardson
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former employee of Qualcomm with insider trading. The SEC alleged that the former employee, Stephen Richardson, used confidential information to trade in the stocks of three companies before their merger and acquisition transactions.
Cases of insider trading and their effects
Cases involving insider trading have had a profound effect on the financial industry’s ethical standards and regulatory framework. As a result of these events, both insider trading regulations and the ethical standards of businesses and other organizations have been revised.
Alterations to the Law
As a result of insider trading cases, the SEC and other regulatory agencies have implemented several reforms. Insider trading regulations are being strengthened in several ways, including harsher punishments for violators, closer examination of deals, and stricter enforcement. Also, the SEC has established a whistleblower program to reward anyone who comes forward with information on illegal insider trading.
Adjustments to Moral Procedures
Insider trading scandals have also prompted businesses and other organizations to adopt more moral policies. Employees of many companies are now obligated to report suspicious trading behavior and to not trade based on nonpublic information, per the company’s policy. Furthermore, businesses have started enforcing codes of ethics and conduct meant to curb insider trading.
Conclusion
In most countries, it is unlawful to engage in insider trading because of the serious nature of the fraud it represents in the securities market. Well-known and recent instances of insider trading have prompted substantial policy shifts and changes in corporate culture. These incidents have brought to light the necessity for stricter enforcement of insider trading rules and the significance of ethical behavior in the financial sector.
